Questions grow on U.S. lobbyists with strong ties to Chinese firm linked to espionage worries

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Photo - <i>Editor's note: Randall Popelka left Huawei earlier this year. </i>
Editor's note: Randall Popelka left Huawei earlier this year.
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An aggressive drive to acquire American telecommunication companies by a Chinese firm tied closely to the Peoples' Liberation Army and represented by some of Washington's most powerful lobbyists appeared to have ended Tuesday, but was back in high gear by the end of the week.

The Shenzhen-based Huawei Technologies said Tuesday that it was no longer interested in the U.S. market, despite being the world's second-largest provider of broadband net-gear and having significant commercial partnerships with multiple firms here, including a $600 million tie-up with Clearwire Corp.

The Bellevue, Wash.-based Clearwire created the first 4G broadband network in America, which now serves an estimated 130 million people in 35 of the nation's 40 largest markets.

Despite their firm's extensive business ties here, Huawei officials announced Tuesday that the U.S. market would no longer be a priority for future development.

By Thursday, however, Huawei spokesman William Plummer told The Washington Examiner that "nothing has changed in terms of Huawei in the U.S."

The apparent reversal of course may have reflected indecision among Huawei leadership about how to respond to growing concerns in the U.S. intelligence community about their firm's closeness to the PLA.

The U.S. House Intelligence Committee charged last year that Huawei was implicated in corporate espionage activities, including the insertion of malicious hardware and software into U.S. telecommunications networks that are critical to America's digital and other defense systems.

"Huawei, in particular, provided evasive, nonresponsive, or incomplete answers to questions at the heart of the security issues posed," the committee said in its unclassified report on the issue. The committee has not released its classified report on Huawei and ZTE, another Chinese company of similar concerns.

The FBI, the Department of Homeland Security and the Justice Department in January this year also asked for a delay in the pending SoftBank-Sprint Nextel merger because Huawei would be a major player in the proposed deal.

It was in light of such concerns that some U.S. experts suggested this week that Huawei was trying to lower its visibility.

"What is their true intent? They are in some ways, 'going to ground,' if you will, trying to reduce their visibility at this time. There is still reason to be concerned," said Michael Wessel, a member of the U.S.-China Economic and Security Commission, a congressionally chartered body.

Regardless, Huawei is continuing its impressive Washington presence, led by a high profile Washington lobbying firm that features multiple influential American corporate and political veterans.

It hasn't been easy for Huawei to achieve such prominence in a town in which some very powerful people have concluded the Chinese firm represents a threat to U.S. national security interests.

"It was controversial," Stewart Baker told The Washington Examiner. "The lobbyists felt a lot of heat." Baker is a former assistant secretary of homeland security.

"They had members of Congress writing to them saying, 'Why are you defending a company who an entity of the U.S. government believes is a security risk?'" Baker noted.

Charles Fried, a Harvard law professor and former U.S. Solicitor General, agreed.

"I think it stinks," Fried said. "It think it just shows that some people will do anything for money. Everybody is entitled to a lawyer. I didn't know that everybody is entitled to a lobbyist."

Federal records show Huawai paid $1 million in lobbying fees to APCO Worldwide, a powerhouse Washington-headquartered public relations and lobbying giant with 600 employees and 29 offices worldwide.

Besides APCO, Huawei has also built an in-housing lobbying shop stocked with former members of Congress and top congressional staff, at a cost of $1.2 million. The Chinese firm also retained the Chicago-based law firm Sidley Austin whose most famous alumnus is First Lady Michelle Obama.

Last April, Rep. Frank Wolf, R-Va., chairman of an influential House appropriations subcommittee, wrote Sidley Austin after learning Huawei had retained the firm.

"I was surprised that a firm of your caliber would agree to represent a company that is so closely connected to the Chinese government," Wolf told Carter G. Phillips, Sidley Austin's managing partner.

"For these reasons, I urge you to reconsider your firm's relationship with Huawei," Wolf wrote. Philips provided only a cursory acknowledgement of Wolf's concerns.

Former Rep. Rick Boucher, D-Va., who directs Sidley Austin's "governmental strategies" practice and is a 28-year House veteran, was seen making the rounds on Capitol Hill on behalf of Huawei last year, according to senior congressional sources.

Sidley Austin, however, did not file a 2012 lobbying disclosure report as a registered Huawei lobbyist, and a Sidley Austin spokesman refused to say if the firm continues to lobby for Huawei.

When The Washington Examiner asked Boucher, he said he was busy and hung up the phone.

Former Rep. Don Bonker, D-Wash., is APCO Worldwide's executive director and leads the Huawei account. He is a 14-year House veteran who served as a senior member of the House Foreign Affairs Committee.

Joining Bonker is Brian McLaughlin, formerly of the Senate Homeland Security and Governmental Affairs Committee.

Rounding out the APCO team is Barry Schumacher, director of APCO's international policy division who specializes in foreign-based accounts.

An APCO spokesman confirmed to The Washington Examiner that the company still represents Huawei.

But some Washington powers have had second thoughts about representing Huawei. Last December, for example, the law firm of Baker Hostetler resigned without explanation as a Huawei lobbyist, according to a report filed under the lobbying law.

A Baker Hostetler spokesman declined to comment, saying they had not received approval from Huawei.

"There were plenty of people who had an opportunity to work there that decided not to because of this reputational issue," Stewart Baker told The Washington Examiner.

Six Americans still staff Huawei's Washington office. Four have held high national security posts.

The most high profile is Donald Morrissey who worked for former Rep. Bill McCollum, R-FL. McCollum served three terms on the House Intelligence Committee. Morrissey was the legislative director of the House Republican Task Force on Terrorism and Unconventional Warfare.

Dennis Amory joined Huawei from the U.S. Department of Commerce where he worked during the second Bush administration at the National Telecommunications and Information Administration from 2007 to 2011.

James McGee came from former Sen. Kay Bailey Hutchinson's staff. Texan Hutchinson was ranking Republican on the Senate Committee on Commerce, Science and Transportation before her retirement following the 2012 election.

Andy Purdy was a White House staffer for President George W. Bush who drafted the nation's cyber security policies and later joined the U.S. Department of Homeland Security in sensitive posts.

Richard Pollock is a member of The Washington Examiner's Watchdog investigative reporting team. He can be reached at rpollock@washingtonexaminer.com.

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